The Cutting Edge | 411 / A Consumer Look at Telecommunications

New Regulations May Help Close Loopholes That Protect Resellers

In the fight against telephone "slamming," regulators have long had trouble tracking down and punishing lesser-known phone companies that resell long-distance service carried by another firm.

But a series of new anti-slamming regulations that take effect this fall may help close loopholes that for years have protected unscrupulous long-distance resellers.

Slamming is the illegal practice of switching a customer's long-distance service without permission.

Such "reseller" companies typically do not own their own phone network or equipment. They operate by purchasing long-distance service in bulk from larger companies and selling that service to consumers under their own brand names.

Many reputable companies operate using some form of that model, including such well-known long-distance providers as Working Assets. But there also are many resellers who profit from slamming.

Under current rules, federal regulators have no way of distinguishing resellers from the underlying phone company that physically carries the traffic. So a reseller who buys bulk access to AT&T's long-distance network, for example, could use AT&T's carrier identification code, or CIC, because resellers are not issued separate identifiers.

Without separate codes to identify long-distance traffic that stems from a reseller, federal regulators have a harder time tracking rogue carriers, which sometimes change their names and addresses to avoid punishment.

Last month, the Federal Communications Commission announced regulations that require resellers to obtain their own carrier identification code. Resellers must also register with the FCC basic information about their companies and the brands they have used to sell long-distance service.

In addition, the FCC's anti-slamming measures:

* Tighten procedures to verify that customers approved changes in their long-distance providers.

* Adopt a better definition of "subscriber" that allows customers to designate who is authorized to approve a change in their long-distance carriers.

* Require companies to submit biannual reports to the FCC detailing the number of slamming complaints they receive.

Under a set of anti-slamming regulations previously approved by the FCC, long-distance companies will be subject to tougher restrictions and customers who have been slammed will be absolved of 30 days worth of charges.

All the FCC's stepped-up anti-slamming regulations are expected to be in effect by the fall. The actual effective dates depend upon the timing of administrative steps such as publishing the new rules in the Federal Register.

More Area Code Action: State Sen. Debra Bowen (D-Marina del Rey) continues to press for special area codes that could be assigned to wireless phones, pagers, automated teller machines and other devices that need numbers.

Legislation backed by Bowen gained momentum recently when it passed the state Assembly Utilities and Commerce Committee on a 9-3 vote. The bill, SB 1741, is scheduled to be considered later this month by the Assembly Appropriations Committee. Bowen's bill does not lay out which devices would be affected, but would require state regulators to use a technology-specific--also called a service-specific--overlay area code once all phone number conservation measures have been exhausted.

California regulators currently do not have authority to create such area codes, but the state and several others have asked the FCC for permission to do so. The FCC has not yet acted on the requests.

A wide range of phone companies vehemently oppose Bowen's bill and the concept of service-specific area codes, arguing that they create an uneven playing field for wireless phones.